Kabushiki Kaisha Universal v Aristocrat Leisure Industries Pty Ltd

[1998] FCA 156

FEDERAL COURT OF AUSTRALIA

PRACTICE & PROCEDURE - Federal Court Rules O 58 r 4(2) - application for an extension of time in which to institute an appeal from a decision of the Commissioner of Patents - whether special circumstances exist - length of delay - whether applicant blameless - whether prejudice to the respondent - application dismissed.

Federal Court Rules, O 58 r 4(2), (3)

Jess v Scott (1986) 12 FCR 187, cited
Stollznow v Calvert [1980] 2 NSWLR 749, cited
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344, cited
Seiler v Minister for Immigration (1994) 48 FCR 83, cited
Re Envirotech Australia Pty Ltd (1989) 14 IPR 108, cited
Johns v Australian Securities Commission (1992) 108 ALR 277, cited

KABUSHIKI KAISHA UNIVERSAL v
ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED
NG 971 of 1997

BRANSON J
SYDNEY
4 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 971  of   1997

BETWEEN:	KABUSHIKI KAISHA UNIVERSAL Applicant
AND:	ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED Respondent
JUDGE(S):		BRANSON J
DATE OF ORDER:		4 MARCH 1998
WHERE MADE:		SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed.

1. It be declared that the appeal herein has not been validly instituted.

1. The applicant pay the respondent’s costs of the matter.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 971 of 1998

BETWEEN:	KABUSHIKI KAISHA UNIVERSAL Applicant
AND:	ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED Respondent

JUDGE(S):	BRANSON J
DATE:	4 MARCH 1998
PLACE:	SYDNEY

REASONS FOR DECISION

This is an application by notice of motion made pursuant to O 58 r 4(2) of the Federal Court Rules (“the Rules”) for an extension of the time within which an appeal from a decision of the Commissioner of Patents may be instituted.

O 58 r 4(2) provides as follows:

“An appeal must be instituted within 21 days after the date of the decision appealed from or within such further time as the Court, on application, fixes, unless a law of the Commonwealth provides otherwise.”

O 58 r 4(3) deals with the procedure to be adopted when an extension of time is sought.  It provides as follows:

“Application may be made to the Court to extend the time for filing, by notice of motion:

(a)made at any time - unless a law of the Commonwealth provides otherwise;

and

(b)      supported by affidavit showing special circumstances.”

It is not suggested that there is any law of the Commonwealth relevant to the circumstances of this case which provides to the contrary effect to O 58 r 4(2) or (3).

BACKGROUND

It appears that the applicant is a Japanese company. 

On 6 June 1997, a delegate of the Commissioner of Patents (“the delegate”) refused Patent Application No. 653873, which application was made by the applicant, following a hearing at which the respondent opposed the grant of a patent on the application.

A copy of the decision of the delegate was provided to the firm of Shelston Waters, Patent Attorneys, the patent attorneys for the applicant, on 6 June 1997.

For reasons which have not been explained, other than by attaching to them the description “administrative oversight”, the applicant’s Japanese representative, Kyoritsu Institute for International Industrial Property (“Kyoritsu”), was not informed of the decision of the delegate until 26 June 1997.   On that day, Shelston Waters sent a letter to Kyoritsu by facsimile transmission.  All further relevant correspondence between these two parties was also sent by facsimile transmission.   The letter of 26 June 1997 sent by Shelston Waters to Kyoritsu asserts that a copy of the decision is “enclosed”.  However, by reason of what was described in evidence as “a clerical error”, a copy of the reasons was not sent to Kyoritsu on 26 June 1997.    The letter of 26 June 1997 did not advise the Kyoritsu of the time within which any appeal was required to be lodged, but it did advise that “[i]f your client wishes to proceed it will be necessary to lodge an appeal as soon as possible.” (emphasis  original)

A letter dated 8 July 1997 from Shelston Waters to Kyoritsu includes the following passages:

“As we have not heard further from you we assume that no action is required in relation to an appeal from the decision of the Patent Office dated 6 June 1997 ... if your client is considering pursuing the matter then it will be necessary to commence the necessary proceedings immediately.”

In fact, by the date of this letter, the twenty-one day period referred to in O 58 r 4(2) had already expired.

By letter dated 10 July 1997, Kyoritsu advised Shelston Waters that it had not received a copy of the delegate’s decision.   This omission was rectified on the same day.

On 11 July 1997, Kyoritsu sought advice from Shelston Waters as to “the due date for lodging an appeal”, and, on 14 July 1997, Shelston Waters responded advising, amongst other things, as follows:

“You will appreciate that the due date for filing an appeal was 27 June, 1997.   However, it is possible to obtain an extension of this time although reasons must be supplied.  It will also be necessary to provide the court with some initial reasons as to why your client believes they are in a position to succeed.  Accordingly, if your client wishes to take this matter further could you let us know immediately as any delay at this stage will be detrimental.”

By letter dated 17 July 1997, Kyoritsu informed Shelston Waters that:

“As to filing an appeal, our client is considering at present whether the appeal should be filed or not.  Our client thinks that it will take two or three weeks to reach a conclusion.

Therefore, we would ask you to obtain an extension of the time for filing the appeal until our client draws the conclusion.”

The response of Shelston Waters to the letter of 17 July 1997, which was sent on 22 July 1997, relevantly reads as follows:

“To obtain an extension, and they are not automatically granted, requires the submission of reasons for the delay as well as reasons as to why the appeal should succeed.   Perhaps more importantly, however, we will have to submit that your client does in fact wish to proceed with the appeal.  From the comments in your facsimile we note that this may not yet be the case.  The Court will also closely consider any delay between the 27 June 1997 deadline and the actual date that the application for an extension is made.  The longer this period the less likely that the extension will be granted or, alternatively, the more substantive the reasons required to justify the extension.

We look forward to hearing from you as soon as possible and welcome any comments or enquiries you may have.”  (emphasis original)

By letter dated 25 July 1997, Kyoritsu advised Shelston Waters that its client had decided not to file an appeal, but by a further letter of the same date, Kyoritsu advised that its client wished to consider the matter again and that the earlier letter should be disregarded.

Correspondence between Kyoritsu and Shelston Waters continued between 12 August 1997 and 16 September 1997, with Shelston Waters reiterating that continuing delay might prejudice any application for an extension of time.  On 16 September 1997, Kyoritsu conveyed to Shelston Waters the decision of the applicant to file an appeal.

By letter dated 18 September 1997, Shelston Waters sought from Kyoritsu “a detailed explanation of your client’s decision making process leading up to your instructions dated 16 September 1997 to proceed.”   The letter advised that “any delay at this stage is prejudicial”.

On 19 September 1997, Kyoritsu advised Shelston Waters as follows:

“As to the reasons outlining why the appeal was not timely filed, our client’s decision took time because our client was considering validity of the present invention, technical worth thereof, cost of an appeal and so forth.  If you think of other reasons, please add them to the above reasons.”

On the same day, Shelston Waters sought an elaboration of the above reasons.  It received a chronology of relevant events from Kyoritsu on 30 September 1997.

In the meantime, on 18 September 1997, solicitors were retained by Shelston Waters on the applicant’s behalf.  It appears that such solicitors informally briefed counsel in the matter on 20 October 1997, and that a formal brief was provided to such counsel on 31 October 1997.

Counsel provided written advice concerning the proposed appeal on 17 November 1997.   A notice of appeal was filed on 20 November 1997 and, as is mentioned above, a notice of motion seeking an extension of the time for the institution of the appeal was filed on 26 November 1997.

THE LAW

The terms of O 58 r 4(3)(b) indicate that an extension of time pursuant to O 58 r 4(2) is only to be granted where special circumstances are shown.  Special circumstances are circumstances which take the case out of the ordinary so as to justify departure from the general rule that an appeal is to be instituted within twenty-one days from the date of the decision (cf. the discussion by the Full Court of the expression “for special reasons” appearing in O 52 r 15(2) in Jess v Scott (1986) 12 FCR 187 at 195). The power given by O 58 r 4 to grant an extension of time within which to file an appeal is a grant of a flexible discretionary power which, although it is only to be exercised in a particular case when circumstances exist which justify departure from the usual rule, is not otherwise confined except by the dictates of the justice of the case.

Factors appropriate to be taken into account in the exercise of the discretion include:

(a)       the length of the delay (Jess v Scott at 195);

(b)the explanation for the delay, and in particular, whether the plaintiff is personally blameless for the delay (cf. Stollznow v Calvert [1980] 2 NSWLR 749 at 753);

(c)any prejudice to the respondent or to other persons, arising out of the delay (cf. Douglas v Allen (1984) 1 FCR 287 at 294-5; Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 349);

(d)actions taken by the applicant to alert the respondent to the fact that the decision is, or may be, contested (cf. Hunter Valley Developments Pty Ltd v Cohen at 348-9);

(e)the merits of the proposed appeal (cf. Hunter Valley Developments Pty Ltd v Cohen at 349; Seiler v Minister for Immigration (1994) 48 FCR 83 at 98);

(f)alternative avenues of relief, if any, available to the applicant (cf. Re Envirotech Australia Pty Ltd (1989) 14 IPR 108 at 116); and

(g)questions of public interest, if any, in the subject matter of the appeal (cf. Johns v Australian Securities Commission (1992) 108 ALR 277).

CONSIDERATION

I am satisfied that the applicant has surmounted the hurdle of showing that this case is attended by special circumstances.   That is, there are in this case circumstances which take it out of the ordinary so as to justify departure from the general rule that an appeal is to be instituted within twenty-one days from the date of the decision.  Such circumstances include that the applicant is represented by a Japanese company apparently unfamiliar with the practice and procedure of this Court, that the applicant, by its representative, was not informed by its Australian patent attorney of the decision until the time fixed by the Rules for the institution of an appeal had nearly expired, and that the applicant did not see a copy of the decision until after the time fixed by the Rules for the institution of an appeal had expired.

The existence of such special circumstances, however, does not compel the granting of an extension of time to the applicant:  it merely brings into play the discretion of the Court to grant, or not to grant, such an extension of time.

In this case the length of delay was substantial:  it was nearly eight times the period provided by the Rules.  Although the applicant was blameless concerning the initial delay, its Japanese representative had been told by about 26 June 1997 that if the applicant wished to proceed with an appeal, “it will be necessary to lodge an appeal as soon as possible.”   In the absence of any evidence to the contrary, I act on the basis that all relevant information provided to the applicant’s Japanese agent, Kyoritsu, was promptly relayed to the applicant. 

Thereafter, the applicant was urged on a significant number of occasions to act promptly if it wished to institute an appeal.  By at least mid-July 1997, the applicant knew that the time prescribed for the filing of an appeal had passed, and that if it were to lodge an appeal, it would require a court order extending the time within which it could file such appeal.  Nonetheless, the applicant did not issue instructions (other than those promptly revoked on 25 July 1997) concerning any appeal until 16 September 1997.   No satisfactory explanation for this delay has, in my view, been provided to the Court.  I note that by letter dated 17 July 1997, Kyoritsu informed Shelston Waters, presumably on instructions from its client, that “[o]ur client thinks that it will take two or three weeks to reach a conclusion.”   In fact nearly nine weeks passed from that time until instructions to institute an appeal were conveyed to Shelston Waters.

Moreover, slightly more than nine weeks elapsed between the receipt by Shelston Waters of the applicant’s instructions to institute the appeal and the filing of the Notice of Appeal.  That period alone is three times the period fixed by the Rules.

I do not find the limited explanation offered to the Court for the substantial delay in this matter satisfactory.  Nor do I consider the applicant itself to be blameless so far as a considerable portion of this delay is concerned.   Indeed, I conclude that the applicant felt under no real obligation to act with expedition in reaching a decision as to whether or not to issue instructions for an appeal to be instituted, notwithstanding the legal advice which it received to the effect that delay would be detrimental to its interests.

I am prepared to assume that the applicant’s appeal has merit.   I accept that the applicant has no avenue of redress in respect of the delegate’s decision other than an appeal to this Court.   I note that there is no suggestion of any question of public policy arising in this case such as that discussed in Johns v Australian Securities Commission (1992) 108 ALR 277.

The extent of the delay in this case was, in my view, significantly greater than the special circumstances of the case warranted.  An object of rules like O 58 r 4(2) is to set a timetable for the conduct of litigation in order to allow affected parties to know when a determination may be regarded as final.  Although the Court has an unfettered discretion to extend the time allowed by O 58 r 4(2) for the institution of an appeal where special circumstances are shown, such discretion is not to be exercised in disregard of the above object.

I note that no action was taken by any representative of the applicant to alert the respondent to the fact that the applicant had under active consideration the possibility of an appeal against the decision of the delegate.  The respondent was thus entitled to become increasingly secure in its belief that the decision of the delegate was not to be challenged.  Although most of the prejudice which it was contended that the respondent would suffer were this application to succeed is prejudice which would flow from any appeal succeeding, not prejudice arising by reason of the delay in the institution of the appeal, some prejudice to the respondent is to be seen to flow from its loss of such security, and from the circumstance that, for some time, it has acted on an assumption which the applicant now seeks to render false.

Having weighed up all the circumstances of this case, I am satisfied that those that tell against an extension of time outweigh those that tell in its favour.  

The application for an extension of time within which the appeal in this matter may be instituted will be dismissed.  As a consequence, the appeal has not been properly instituted as required by the Rules.  There will be a declaration accordingly.

The applicant is to pay the respondent’s costs of this matter.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Decision herein of the Honourable Justice Branson.

Associate:

Dated:             

Counsel for the Applicant:	T. J. Hancock
Solicitor for the Applicant:	Peter Cornelius & Partners
Counsel for the Respondent:	A.I. Tonking
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	26 February 1998
Date of Judgment:	4 March 1998